With SYRIZA poised to win the snap elections to be held on the 25th of January, the question on many people’s lips is, ‘where will they find the money to fund their economic program?’
The leftist opposition party has vowed to end austerity, reversing salary cuts in the public sector and launching a program to alleviate Greece’s ‘humanitarian crisis’ and drive economic growth. At the same time however SYRIZA insists that it is committed to keeping Greece in the euro, putting it on a collision course with Greece’s lenders. While years of austerity in Greece has left the country with a primary surplus, the country is still reliant on international lending to cover its debt and interest payments. Without a new deal with Greece’s troika of lenders (the IMF, ECB and European Commission) when the current one expires in March, Greece will be unable to cover all of its funding needs in 2015, let alone boost spending on additional programs, however well intentioned.
That has led many to question whether the party’s economic platform is viable.
SYRIZA will seek to allay those fears with an updated version of the program that was first outlined publicly by Alexis Tsipras at the Thessaloniki International Fair in September.
The revised program, developed by a team led by Yiannis Dragasakis and yet to be approved by the party, is to be presented this Saturday. A central platform is one of the party's longstanding arguments: that part of the solution lies in “the war against corruption and nepotism and in the drastic reduction of tax evasion and of the black economy.”
SYRIZA maintains that these problems have intensified over the past few years due to the explosion in unemployment and the deep recession. As such, the party will put forward measures such as a fair restructuring of debts owed to social security funds, bolstering audits of businesses potentially employing people off the books and other inspection mechanisms. SYRIZA’s program also foresees greater oversight of trades between subsidiary companies within the same group, offshore companies and the fuel market.
These proposals should be taken within the wider context of the opposition party’s economic program: as a general philosophy the primary target of restricted fiscal policy (austerity in other words) is replaced by the goal of regaining fiscal sovereignty. According to exclusive information obtained by TheTOC, the party believes that primary deficits are an error that should not be repeated. The Dragasaki committee proposes a redistribution of the tax burden, broadening the tax base and other measures.
Another fundamental difference from the status quo is SYRIZA’s intention to stop using primary surpluses to pay down the debt, instead using the surplus funds to reduce the state’s dependence on European structural funds and borrowing to cover its basic operational costs.
Furthermore, SYRIZA will not seek to increase public spending overall but will stabilize it (not moving ahead with additional cuts) and redistribute spending, with greater emphasis on social spending to assist vulnerable groups (combating what the party calls the ‘humanitarian crisis’) and on healthcare, education and culture as well as the program of public investments. The party aims to go through the current program of public spending with a fine-toothed comb to meet these priorities.
As such a fundamental overhaul of public administration will be vital. The party also vows that any new lending will be for investment programs, not for other state spending or in order to pay down the public debt.
Bonds, government bonds
Under the paragraph, “public borrowing” new weapons are added to the next Finance Minister’s arsenal, such as ‘tax bonds’ (with the government mortgaging future tax revenue), bonds that will be directed at Greeks of the diasporas and foreign residents, bonds which will finance development projects and, finally, bonds linked to the securitization of real-estate assets. (With regards to the last, 'cooperation' between the state and private individuals is a running theme throughout the proposals - as opposed to outright privatizations).
Finally, according to the program, the cost of public investments should not be factored into the accounting of the public deficit in the context of the EU’s Stability and Growth Pact.
The proposal also includes other ideas including reform of the European structural funds program and closer cooperation with other potential funding sources including China, Russia and countries of the Middle East.
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